Property owners face steep tax increases

Tax_Savings_Holiday_Property

Australia – A bull run in Melbourne’s commercial real estate values over the last five years has caused a sharp rise in land tax assessments arriving in landlords and property owners’ mailboxes, rattling many investors.

long with stamp duty, land tax is one of the Victorian treasury’s biggest revenue sources, expected to contribute $3.1 billion to government coffers this financial year.

Your Property Angels Attorney Realtor Partner will advertise and sell your property, offer you exclusive professional service and do all your real estate transfer under one roof.

Property Angels – Sales. Service. Transfer.

But the tax rates are calculated using extremely low value thresholds, last reviewed in 2009, which industry professionals maintain are severely out of kilter with current high property values.

Few property owners are willing to share their experiences on the record because of financial sensitivities.

A government spokesperson said: “We’re making land valuations fairer and more consistent across the state.

Discover the easiest way to buy or sell your real estate across South Africa with Property Angels

“Annual valuations will bring Victoria in line with the rest of the country so they are more up-to-date and accurate.”

“I have one client,” says a commercial law partner at a big city legal firm (he was unwilling to be identified because of the firm’s government work), “who owns a retail shop in Elizabeth Street.

“Two years ago in 2016 their land tax was $10,000. It was revalued and then went up to $50,000 for the last two years. In the current round, it’s gone up to $107,000.

“It’s all being caused by bracket creep. There has been no amendment to the scales and trigger points since 2009 … [and it is] creating capricious and unconscionable outcomes.”

Mr Reisch, a German migrant who arrived in Australia 30 years ago with $2000 in his pocket, says his situation is similar.

“I started as a beekeeper and moved from bees to hospitality to new-car franchises,” he said.

“I built the largest BMW/MINI privately owned franchise in Australia over a 25-year period, employed well over 200 staff at two locations and was official importer of Alpina BMW cars and paid a lot of taxes on the way, and still do.”

After he and his investment partners sold the dealership business they kept key rental properties which are now in a property trust managed by Mr Reisch.

One property is in Commercial Road, South Yarra. It has a seven-year lease to a Volkswagen dealership with annual rental increases fixed to the consumer price index, around 2 per cent.

Land tax on the property was initially around $50,000, it moved to $120,000 three years ago, and then just under $200,000 last year. This year it topped $350,000 which represents half of the property’s rental income.

Most of the rise was attributable to a steep hike in valuations based on “highest and best use” of the land, sparked by a recent apartment-friendly rezoning in the area and rising commercial values.

“There is a concern that this trend will continue and we could be in minus by the end of the lease term or even sooner,” he said.

Mr Reisch acknowledges he is lucky, he still has a profit (on which he pays 30 per cent company tax). Many self-funded retirees will be out of pocket on smaller property investments, such as high street shops, if they experience similar tax increases.

Investors were failing to factor in the potential for a steep rise in land tax when calculating the yield return of the property they were purchasing, he said.

Landlords in Victoria cannot pass on land tax costs to tenants unless they are publicly listed companies.

“Everyone needs to pay taxes. It just needs to be fair,” said Mr Reisch. “You ask yourself, ‘Why invest in a rental property which employs 45 people when the return is being gobbled up by out-of-control land tax?’.”

Daren McDonald, a partner with accounting consultants Shinewing, said property owners’ yields and returns were under assault. A cap on land tax increases or some form of indexing was needed to ensure it didn’t get out of control.

“Some of these people won’t be able to afford to keep the properties they own,” he said.

By Simon Johanson

Source -Sydney Morning Herald

Property Angels is an online property website portal that promotes residential property for sale across South Africa. You can buy, sell, list and find South African properties online. Find houses for sale in Johannesburg, Cape Town and Durban which are the three biggest cities in South Africa.

Some of the top property websites in South Africa are Private Property, Property 24, My Property, Property Fox, PropertyCoZa, Remax, Pam Golding, LeadHome, SA Hometraders, Gumtree and Property Angels.

Whilst most online property brands offer online visibility for Estate Agents South Africa, Property Angels offers online visibility for Attorney Realtor Agents South Africa.

Whether you have a property for sale or you are seeking a house to buy in the southern suburbs, Northern Suburbs, Eastern suburbs or Western suburbs, Property Angels is your best attorney realtor property website South Africa. Sell your property onlinewith Property Angels and an Attorney Realtor will call you back today or the next business day.

Whether South Africa is in a buyer’s market or in a seller’s market, contact Property Angels today for quick and efficient online and face to face service.

List your house for sale with Property Angels. You can also find property to view, property selling tips and many other useful property and finance blog articles and property products that are bespoke to your needs. Buy and sell your private residential property through Property Angels. Allow Property Angels to become your chosen property website portal for your choice of homes to sell and homes to buy.

Find below the various provinces, towns and cities across South Africa from where you can sell property or buy property or list property for sale with Property Angels.

Property for sale Eastern Cape: Alice, Butterworth, East London, Graaf-Reinet, Grahamstown, King William’s Town, Mthatha, Port Elizabeth, Queenstown, Uitenhage, Zwelitsha

Property for sale Free State: Bethlehem, Bloemfontein, Jagersfontein, Kroonstad, Odendaalsrus, Parys, Phuthaditjhaba, Sasolburg, Virginia, Welkom

Property for sale Gauteng: Benoni, Boksburg, Brakpan, Carletonville, Germiston, Johannesburg, Krugersdorp, Pretoria, Randburg, Randfontein, Roodepoort, Soweto, Springs, Vanderbijlpark, Vereeniging

Property for sale Kwazulu Natal: Durban, Empangeni, Ladysmith, Newcastle, Pietermaritzburg, Pinetown, Ulundi, Umlazi,

Property for sale Limpopo: Giyani, Lebowakgomo, Musina, Phalaborwa, Polokwane, Seshego, Sibasa, Thabazimbi

Property for sale Mpumalanga:  Emalahleni, Nelspruit, Secunda

Property for sale North West: Klerksdorp, Mahikeng, Mmabatho, Potchefstroom, Rustenburg

Property for sale Northern Cape: Kimberley, Kuruman, Port Nolloth

Property for sale Western Cape:  Bellville, Cape Town, Constantia, George, Hopefield, Oudtshoorn, Paarl, Simon’s Town, Stellenbosch, Worcester